India Plans New Import Tax on Solar Equipment 
Solar panels designed for agricultural use. (Photographer: Luke Sharrett/Bloomberg)

India Plans New Import Tax on Solar Equipment 

India’s renewable energy ministry has proposed imposing customs duties on some solar power equipment starting Aug. 1 as part of the country’s goal of becoming self-sufficient, the Press Information Bureau said in a statement.

The ministry is targeting solar cells, modules and inverters, it said in the statement, citing minister Raj Kumar Singh’s discussions with industry officials. The decision comes amid recent border skirmishes with China, which accounts for nearly 80% of module supplies in the country.

Indian Prime Minister Narendra Modi last month called for increased self-reliance after the pandemic disrupted global supply chains. Recent border tensions with China have made that campaign more urgent.

Although there’s no official word yet on the size of the tax, the Economic Times reported it may be 20%, citing unnamed government officials. A clear trajectory of the customs duty will be declared in due course, the government said in the statement, without giving further details. India currently levies a 15% safeguard duty on imports of solar cells and modules from China and Malaysia. That tax expires at the end of July.

Singh asked the industry to consider stopping imports of products whose domestic supplies are adequate, and added that developers using domestic equipment will get cheaper financing from lenders Power Finance Corp. and REC Ltd., according to the statement.

Singh also told industry officials that a foreign direct investment unit has been created in the renewable energy ministry to vet investments from countries bordering India.

©2020 Bloomberg L.P.

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